Programmatic: The Holy Grail Of Media-Buying?

Programmatic -- who would have thought that such a simplistic concept could carry such implications to our industry at large. As it turns out, you can’t open a general business paper or a trade journal without reading about programmatic for Internet advertising. It’s the white-hot topic of the day. Everyone is trying to understand it, figure it out, tap into it, explore it -- but has anyone thought about the fact that programmatic might just be the holy grail for television advertising as well? Think about it for a second: take the sight, sound, motion and emotion of television (arguably the most engaging medium there is) and add the accountability and targeting abilities of digital using data to buy impressions wherever they may be (aka audiences) to give you the best of both worlds. Now that’s programmatic buying.

We have seen articles questioning whether TV ads will slowly shift to Web video -- even hinting that several major advertisers might move funds, originally spent on television advertising, to online video outlets. 

Is this the first trickle before the deluge? Or much ado about nothing? Or does programmatic for TV represent the opportunity to stem any outflow of dollars?

Better yet, are these even the right questions to be asking in the first place? To suggest, for example, that advertisers are going to be abandoning the television medium just isn’t supported by industry projections. SNL Kagan, for example, estimates that Network Cable advertising is going to grow at a 9% annual compound rate over the next 4 years (starting in base year 2013 and going through 2016) and 9% for local cable. Even broadcast television, with all its audience erosion woes, is projected to grow 2%. And that’s in an economy that is not operating at full throttle.

And even if serious money began to flow from linear to digital outlets, this is hardly a life-or-death scenario for content providers. After all, they have economic interests on both sides of the video equation. Look no further than the recent ABC announcement to open some of their digital video inventory via programmatic. 

In the end, a robust competitive media market of supply and demand will eventually bring linear and digital video prices (CPMs) into relative equilibrium. Ultimately, “TV dollars” will flow to and settle upon those video outlets where time is being spent, and the best example of that is what happened over the past 20+ years as viewers steadily migrated from broadcast to cable. 

So I believe it comes down to this. In the long run, markets tend to sort themselves out. But in the short run, markets are not always as efficient as they should be, and one of the prime culprits is "information" -- or to be more precise, a lack of information. And that, in a nutshell, is the vital niche that programmatic ad exchanges are fulfilling today. There is a tectonic shift happening in our industry. It used to be that we followed the money; now we follow the data. And the data can be found in programmatic.

Programmatic not only empowers planners and buyers to define their targets in ways we could only dream of in the past, it opens an entirely new universe of inventory options that advertisers may not have thought of for the simple reason that they were unaware of them. And then, of course, there is the nitty-gritty, “back room” ad-serving side of programmatic, which is hardly a “glamorous” function, but it is still an important cog in the information flow that is vital to any marketplace.

Today, there is a significant industry effort underway to transfer the power of digital programmatic over to the world of linear TV. Programmatic can serve as a tremendous economic multiplier by utilizing Big Data that can be quickly processed, parsed and transformed into vital information.

And just for fun, take digital programmatic and TV programmatic one step further and use anonymized consumer data from Internet, television, demographic and purchasing -- you have a powerhouse of cross-media impression buying/selling.

No one is there yet, but stay tuned.

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